The refining of oil and the transport of gas by pipeline could escape the accounting of the future federal cap on greenhouse gas (GHG) emissions for the oil industry, suggest the documents of the consultations launched Monday by Ottawa.
Should major refineries such as those in Montreal East or Lévis, Quebec, escape the maximum emissions limit for the fossil fuel sector promised by the Trudeau government, in the same way as gas pipelines such as the one envisaged by the LNG Quebec project?
The industry itself is invited to give its opinion on this question within the framework of consultations, the details of which were unveiled on Monday by the Minister of Environment and Climate Change, Steven Guilbeault.
“You have to understand that the bulk of the emissions, the majority, comes from production,” explains the minister, in an interview with the To have to.
Many other environmental standards are the responsibility of pipeline operators and refineries, such as fuel standards and pollution pricing, he argues. “I don’t think anyone is left out. »
Such an exclusion would leave the future GHG cap only to oil and gas extraction companies, which are also the ones that emit by far the most greenhouse gases (GHGs), i.e. 84% of all industry. . Canadian oil is among the most polluting in the world by quantity produced due to the exploitation of the oil sands.
Oil refineries and other processing operations are responsible for 10% of the sector’s emissions, with the remainder (6%) being caused by pipelines and transportation. Including these proportionally less emitting industrial activities in the federal emissions cap would make the laws and regulations more complicated to administer, says the document prepared for the consultations.
Expected ceiling
The Liberal Party of Canada was re-elected in September 2021 with a specific promise to “cap and cut emissions from the oil and gas sector.” The Trudeau government’s climate plan, released in March, estimates that it is possible to cut emissions from this sector by 31% below 2005 levels by 2030, which is less than what is required of the government. whole economy (40%). The precise reduction target and details on how to achieve it are eagerly awaited by industry and environmental groups.
The Minister now offers two possible paths, based on mechanisms in place elsewhere in the world, on which oil companies, provinces or environmental organizations can give their opinion.
It is possible that this cap will be achieved by the creation of another carbon exchange, similar to the cap and trade system in force in Quebec, but which would be administered by Ottawa and specific to the oil and gas sector. The other option would be a carbon tax, similar to the one that currently exists across Canada for provinces that have not set a price on emissions themselves, but a special price for industry fossil fuels.
The Minister did not wish to show preference between the two options. An exchange would be more complicated to administer, officials suggest, but a new price on emissions would be less precise or efficient. The linkage between this new mechanism and Quebec’s carbon exchange could prove to be complicated, but since Quebec is not an oil producer, all this harm could be avoided by excluding its two refineries from the mechanism.
Ottawa also wants to give companies that develop carbon capture and storage methods the right to sell credits to oil and gas companies that fail to sufficiently reduce their emissions. The federal government only limits GHG emissions from this industry, not oil and gas production as such.
No unanimity
Although promised during the federal election campaign, this first step towards a cap on emissions from the energy sector is strongly denounced by the province which will be the main one affected.
“Alberta will not accept any plan from a federal government that seeks to interfere with our constitutional right to develop our resources,” Alberta Energy Minister Sonya Savage wrote.
Minister Guilbeault replies that the industry itself aims to reduce its emissions, and reiterates that the Supreme Court has given the federal government the right to act to limit pollution, despite contradictory decisions by lower courts. “Some provinces have shown little enthusiasm, or even will, to put in place significant measures to fight climate change,” he criticizes.
By email, the environmental group Équiterre says it fears that the industry will find “technological loopholes”, such as carbon capture and storage, to reduce its emissions only in an accounting manner. He denounces the planned exclusion of refineries and gas pipelines, an “integral part” of the transport and export of fossil fuels.
Minister Steven Guilbeault expects to release his decision on the chosen system by early 2023. Implementing the GHG emissions cap for the fossil fuel industry could take another two to three years, depending on the complexity of the chosen method.